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KOLKATA: Public sector banks, from State Bank of India to Allahabad Bank, will hire as many as 56,500 people in the next six months in the highest ever recruitment drive by the industry in more than a decade as business grows and the threat of new banks looms as the Reserve Bank of India plans to issue new licences soon. The recruitments by more than a dozen banks will be 30% higher than last year's numbers as hopes of business cycle turning for the better grow, bankers said.

The Institute of Banking Personnel Selection said 20 public sector banks, excluding SBI, will hire 22,415 officers and 32,453 clerks for branch expansion and fill the gap created by retirement and attrition. SBI is independently hiring candidates to fill up 1,500 officer positions. "Public sector banks are in the forefront of accommodating fresh graduates with a clear focus on rural expansion of branches," said NS Rajan, partner and global leader at Ernst & Young.

"They have moved from the realm of being not-so-customer friendly to customer-centric, fuelling the need to look at the market differently... The need now is for HR transformation to help people embrace change."

Public sector bank jobs, a sought-after employment in the 1980s and early 1990s, fell off job seekers' radar towards the end of the last century. Banks that were bloated with staff during the socialistic era ruthlessly lowered headcount by putting a freeze on new hiring and leaving posts of retiring officials unfilled. In fact, the Banking Service Recruitment Board, a relic of the era, itself was abolished and individual banks were given a free hand on hiring. Wages as a percentage of total expenses in state-run lenders fell to 13.72% in 2012 from 17.5% in the previous year because of large-scale retirement. During the past decade, state-run banks have improved their operational parameters.

In fact, business per employee for PSU banks is higher at the end of March 2012 than for private sector ones, data from the RBI shows. But the profitability of private banks is far higher for a variety of reasons, including lesser bad loans. Reserve Bank of India data shows public sector banks' staff strength is 7.7 lakh as on March 2012, which is 76% of total workforce in India's banking sector.

The use of modern technology has helped banks to improve services as well as find new opportunities with low transaction costs. This has led to a surge in business per employee for public sector banks to Rs11.5 crore in 2012 from Rs5.9 crore in 2008. The economy, forecast to grow at 5% this fiscal, may return to a growth of 7% or more in the next few years as the government cleans up the fiscal mess and price pressures ease.

The profitability of the state-run banks could improve as the new hires may be coming in at a lower salary than those who are retiring.